Explaining The Innovator's Dilemma... In Two Minutes With A Whiteboard

from the out-innovate-yourself dept

As you may recall from last month, UPS recently asked us to create a series of videos, where we explain some of the stuff we talk about here on Techdirt on a regular basis in under two minutes, using a whiteboard. The first video was about the economics of abundance and got a great response. The second video is now up, and it's an attempt to explain the Innovator's Dilemma, based on Clayton Christensen's must-read research. If you're unfamiliar with it, it explains how difficult it is for many companies to adapt to changing markets, and is a good framework for understanding both why some companies are so slow to adapt. More importantly, it provides a good system for thinking about your own company and understanding how to adapt and implement new ideas rapidly:

Again, with only two minutes, I had to simplify things down a bit, but hopefully it will kick off another good discussion on the innovator's dilemma and how to deal with it. We still have one more video to go, which I believe will be posted sometime next month. And, yes, once again (though, it should be obvious), UPS sponsored these videos, though we had free rein in creating the scripts -- which should be quite obvious as the topic is one we talk about here frequently enough.

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It's Not The 'Good Enough' Revolution; It's Recognizing What The Consumer Really Wants

from the and-that's-good-enough dept

It's hardly a new idea, but BullJustin points us to an article in Wired about what the author, Robert Capps, refers to as The Good Enough Revolution, in which he talks about various offerings that have succeeded in the marketplace, despite not having the "quality" of the leading products. So, he talks about the Flip Digital video cameras, compared to higher end camcorders, mp3s vs. CDs, and things like Zoho Writer vs. Microsoft Word. His explanation is that these "lower quality" products are "good enough," and tend to offer certain features, such as easier accessibility, lower price and better ease of use.

I'd argue that the concept of "good enough" misses the point -- and the real issue is that the actual quality is in those other characteristics that he discusses. The real problem is that some start to focus on the "quality" of some aspect of the product, rather than the quality of meeting what the consumer wants. It's the same thing we've discussed over and over again, with a company (or industry) not really understanding its market. The first automobiles were a lot crappier than the fancy horse carriages you could buy -- but they did the important thing better: getting you somewhere faster and cheaper.

The issue is that the focus on "quality" is on the wrong attribute. It's also why many people falsely claim that the VHS beat Betamax, despite "lower quality." Yes, it may have had lower quality of the recorded video, but that wasn't the attribute people cared about. They wanted to be able to record longer videos, which the Betamax was not set up to do, but VHS was. In almost every one of these stories, you find that it really was an issue of quality -- but the real question was what attribute the market cared about when it came to quality.

With the MP3 and the Flip Camera and Zoho Writer (and many others), it appears convenience is a driving attribute. So while all may seem to have less in terms of the type of "quality" that some like to focus on, they ignore what the market actually wants, which appears to be convenience.

This, too, is one of the reasons why it doesn't make sense to get so focused on the product when you don't know what the market actually wants. The people who create the initial products almost always assume that the most important attributes are the product itself, rather than the convenience it provides users. There will always be snobs who want to focus on the "highest quality" possible, but they're part of a small market, rather than a mass market. And if that's "good enough" for them, that's fine -- but it misses the real marketing opportunity.

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Reminder From The Innovator's Dilemma: Markets Change Whether You Like It Or Not

from the deny-at-your-own-risk dept

It's hard to think of a book more influential to business strategic thinking than Clayton Christensen's The Innovator's Dilemma. If you haven't read it (or grasped the concept), you are way behind anyone in thinking about innovation and competitive markets, especially in the technology world. I've talked about it in the past, and I'm sure many of you are familiar with it, or have read it, but I'm reminded of one of the key points made in the book that seems to be a key stumbling block in some of the discussions we have around here. The reminder comes from a blog post that Jay Rosen recently mentioned, talking about Christensen's main point, in relation to the new industry, focusing mainly on why so many companies fail at innovating:

The management trap of disruptive technology is insidious because, like all good traps, it doesn't look like one at first. It looks prudent and fits a corporate culture of conservative, data-driven management. But incumbents can't recommend change because it would mean recommending something less profitable, less accepted, and less proven than what they're already doing.

And that's the trap.

Disruptors have no such inhibitions.

This is the key point, and while I'm not going to talk about what that post is actually discussing (the failure of some companies to be able to innovate due to this issue), I am going to use it to try to make a particular point, and hopefully clear up a misperception. There are two points that we're often trying to make around here, and the problem is that those two points often get conflated.

1. What's happening in the market is going to happen anyway.
2. The end result will actually be better for everyone, which is why it's important to embrace the innovation

The two points are related -- and, it's actually one of the key points made in Christensen's famous chart -- but they are different points: So the first point that we talk about all the time is that these changes in the market are happening -- no matter what. As much as the legacy providers don't like it, they don't seem to offer any serious alternatives, other than denial or screaming about how much they don't like it. They don't offer any serious alternatives.

But, the second point is also important. Historically, pretty much every disruptive innovation has followed Christensen's curve, meaning that the eventual outcome really is a better overall solution for the market, and thus makes the market much bigger, even if it doesn't look that way at first. But, the problem is that it's difficult to see that. So, when we get industry defenders (whether it's the recording industry, the movie industry, the newspaper industry or others) insisting that it doesn't make sense to jump off that cliff and embrace these new offerings, because the market just isn't big enough (or, as short-sighted Hollywood execs have taken to saying: "turning analog dollars into digital dimes"), we note that they're absolutely making the management trap described above.

They're refusing to make the leap because of a misunderstanding of both of those points -- but they're often focusing too much on arguing against point two, that they ignore point one. If you want to believe that point two isn't true, that's fine (even if you turn out to be wrong). That doesn't excuse not being able to respond to point one. If you really think that the market is turning into digital dimes, you at least need to do something about point 1: what are you going to do about it. Because, for the most part, it seems like those legacy industry's aren't doing a hell of a lot, other than complaining about what's happening, and then confusing that with point number 2.

They're refusing to do anything because they think that the new market is too small -- not realizing that the existing market is going to zero anyway. So even if you believe that the new market isn't going to be as big (on which point you're almost certainly wrong), you're making a mistake in thinking you can just do nothing. What's happening is you're comparing the new market to the old market -- which no longer exists.

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NBC Universal Likes To Keep Its Head In The Sand About People Watching TV Online

from the it's-all-a-big-urban-legend dept

While NBC Universal has done a decent job with Hulu, the video streaming site it partially owns, the company still seems to be pretty tone deaf to where the market is heading. Reporter Laura Holson told NBC Universal's president of research, Alan Wurtzel that she had ditched her TV and now watches TV solely via her computer, and his response indicates an unwillingness to believe that such things really happen:

"I hear about people like you," he said, a hint of skepticism in his voice. "But the notion that people have forsaken watching cable and network television is an urban myth."

Then he hissed what sounded vaguely like an insult.

"You probably read."

Yet, it is happening more and more often as it becomes easier than ever to watch TV online. And, that trend is only going to continue, thanks to new technologies and services such as Boxee.

In the end, this is something of an Innovator's Dilemma issue. Yes, the number of folks watching TV via their computers is still quite small, it's getting easier and easier to do so, and the offerings are getting better and better. At some point, the line of "good enough" is crossed, and people start flooding to that offering, and away from the older, more expensive offering. NBC Universal may be brushing off the early adopters as something to sneer at, but it's making a huge mistake if it thinks such things will remain on the fringe.

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